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Duking it Out in the E-Book’s “Wild West” Marketplace

(NOTE: This article appeared in computers in libraries 33 (no 1), jan-feb 2013. in light of current litigation, I’m posting it to information | mixology)

The e-book is a new medium, but it follows many other breakthrough products with histories of disruption, adoption, market acceptance, and the forging of new business relationships. Perennials such as CD-Roms, DVDs and iPods come to mind, as each of these new technologies triggered important changes in commerce and entertainment. The disruption was real and has caused serious distress for publishers, but there is no getting around the fact that we are in a new era now. Publishers have gained expertise in digital media and are engaged in intensive experimentation. They are taking big risks with e-books and trying new innovative pricing models. And they are playing a tough game to protect revenue.

The e-book market is moving at “warp speed” and it is hard to stay abreast of events. Fortunately librarians have been lucky in our leadership. The American Library Association has been very assertive in advocating for the most expansive model acquiring and loaning e-books. The result has been a lot of “dialogue,” some tough new policies from the largest publishers, and a sense that it is hard to know what is going to happen next. Authors are involved too, and have their own turf to protect.

With so much ferment, what strategies should librarians adopt to become central to the e-book market? Also, what are the best avenues for revitalizing our long-term relationships with publishers? I see two fundamental strengths that might inform our actions. The first is our close relationship with our user communities. The second is a combination of two related sources of knowledge: how to perceive the e-book “market” from a user perspective, and how to collaborate. A collaborator understands the importance of keeping a balance between open access and making a profit—and that kind of awareness may be the “glue” that keeps libraries and publishers in conversation. Even so, the next few years might be bumpy for e-book collaborators. Here are few signposts of the times, and some thoughts about where we are collectively going.

Borrowing, Buying and Both

2012 has been a year for learning a lot about e-books—and recognizing that we need to know even more. We need better data, too. Blogger Jeremy Greenfield is one great source of intelligence. He is a journalist who follows the e-book industry, both on his own blog and for Forbes (see digitalbookworld.com). In June 2012 he reported on something many of us probably know: libraries and publishers don’t understand each other. Publishers don’t “get” the operational side of libraries, and ALA President Molly Raphael allowed that librarians have more to learn about the e-book market and its effect on publishers and distributors. The result has been a great deal of dialogue, and that’s a good thing. We are talking intensively to publishers to advocate for better access to e-books and reasonable curbs on pricing.

We have good company in our quest to understand how to deploy e-books, too. Greenfield looks to the research findings of the Pew Project on Internet and Society, which has long been a leading voice in analyzing disruptive technologies. Pew reports that e-book consumers are likely both to buy and borrow e-books. What a fascinating approach; it suggests that there is personal joy and comfort in “owning” a digital copy of say, Tolkien’s The Silmarillion, while you might just want to “borrow” a new book by Dean Koontz have an enjoyable, one-time read.

So: buying, borrowing, and both: it’s a user’s solution to a complex market, and it works. As an iPad Mini user, I enjoy checking out what e-books other people keep on their tablets whenever they allow me have a look. Here’s what I find: a collection of favorite books that tends to grow, slowly but surely. I also see a smart shopper’s independent streak concerning “where” they do their buying and “borrowing.” The Kindle app for iPad is widely used on iPads, even though it is an arch-competitor to iBooks. This open-minded “collection building” and shopping suggests a deep love for the artifact, even in digital form, as well as interest in value-shopping in every direction.

It’s hard not love books that enrich our lives, and it looks like the digital version, read on a retina screen, preserves that crucial value. But “process” matters too. Some people favor bookstores, others prefer Amazon Prime, and still more troll through Apple’s ecosystem of goodies. Many are still in the process of deciding what they like best. That’s very big unknown factor for publishers, and our familiarity with user behavior gives us an edge. For example, a friend of mine recently bought a Nook e-reader, and set herself up with a library of favorite titles and authors. Within a month, she was back to print, because she didn’t enjoy the process and experience of e-reading.

The Risk of Rhetoric

It would be an understatement to say the libraries and publishers are worlds apart in how they approach the challenge of e-reading. One of the single biggest risks is frank and committed dialogue might give way to rhetorical warfare. Many advocates of open access already feel that large publishers, such as Harper Collins with its 26-times-only policy, or Random House, with its mammoth price increase to recover for simultaneous and persistent access, have gone over to the “dark side.” Fortunately ALA has taken a lead in trying to forge common understandings, which is helpful, since Jeremy Greenfield reports that 67.2 percent of libraries have been loaning e-books since 2011. Moreover, experimentation is essential, but publishers face a serious obstacle: they cannot collaborate to set prices without facing antitrust litigation. In the resulting free-for-all, every e-book publisher must come up with its own pricing plan. In some ways, the current e-book market has a wild west, “Dodge City” feel.

What strategies can librarians use in the “Dodge City” of e-book pricing? I can think of two. Stay close to their user communities and make sure they know that we are advocating for them, and also continue to keep a place at the table to debate a fair balance that addresses the needs of publishers, distributors, and libraries as collaborators.

“Windowing”

Other entertainment industries offer some guidance on how to sell and how to price, particularly cinema and music. But once again it is worth noting that conditions change fast. The iTunes Library faces competition from subscription services such as Spotify, and the market may change in the near term. But some of the lessons learned may be worth a look. Blogger Michael Schatzkin reports, Hollywood has perfected the art of “windowing” —delaying the release of DVDs until new movies have had a chance to earn their keep at the box office. Move studios are reluctant to hand over their entire catalogs to Amazon and NetFlix, for good reason, if they can still sell DVDs first.

The Windowing approach is an intriguing alternative for publishers, distributors, and libraries, but it has some built-in shortcomings. Most people want to read their favorite authors right away, and many people (myself included) reserve copies new releases months before they appear in print. Would library patrons accept waiting one or two years to borrow an e-book? That seems like a stretch. Therefore my theory is that publishers can certainly try a windowing approach, delaying the release of e-books and perhaps employing a significant markdown, but I think they may face a reader backlash. Social media give activists a very handy tool for registering their dissatisfaction. Perhaps the e-book market will spawn a “reader’s guild” of activists, who could use the power of social media to shape policy.

What’s Needed: Unity

My first career was in independent bookselling, and for that reason I follow the publishing business closely. I find that the many “year of the e-book” debates that are running at full steam follow common threads that go back as far as the release of the mass-market paperback, which was seen as a force of doom for publishers—but was anything but that. The eventual outcome of the e-book debate carries high stakes for publishers, distributors, and libraries, but there is some good news too, showing up among all three stakeholders. Publishers have become much more skilled in handling digital media, and this is making them less conservative. We can now expect some healthy innovation from them. Distributors are crucial players in the sales process, and they have gained more clout. Perhaps they too will push back on pricing and access restrictions as a form of self-preservation. If so this may help consumers. Librarians have become the most articulate advocates for the importance of open access and fair use; we have done our homework and have a compelling “social good” to use as a rallying cry.

Each group has gained through innovation, and yet each has more to learn about a very important function of markets: mutual benefit. At a time when the e-books debate threatens to push players into armed camps, it is vital to find common ground and build unity. If we fail to do that, we should have the courage to admit that the real losers will be readers themselves, who rightly expect us to do a better job of managing the emerging e-book market.